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SunTrust Banks (STI) has agreed to pay $1.5 billion to resolve claims of shoddy mortgage lending, servicing and foreclosure practices.
October 10
SunTrust Banks (STL) in Atlanta reported lower quarterly earnings after it agreed to settle claims over various mortgage-related practices.
The $172 billion-asset company's third-quarter earnings fell 51% from the second quarter and 83% from a year earlier, to $179 million. The quarter included $323 million in expenses tied to last year's national mortgage settlement.
The company had
"Resolving these legacy mortgage matters allows us to focus our efforts on the considerable opportunities that exist in all of our businesses as we concentrate on meeting more clients' needs," William Rogers Jr., SunTrust's chairman and chief executive, said in a press release Friday.
The mortgage issues overshadowed lukewarm results elsewhere. Net interest income fell slightly from the second quarter and was down 5% from a year earlier, to $1.2 billion.
Total loans rose 2% from the second quarter and a year earlier, to $124 billion. Deposits increased 1% from both periods, to $129 billion. The net interest margin compressed 6 basis points from the second quarter and 19 basis points from a year earlier, to 3.19%.
The loan-loss provision fell 35% from the second quarter and 79% from a year earlier, to $95 million.
Noninterest income fell 21% from the second quarter and 73% from a year earlier, to $680 million, due to a reduction in mortgage activity and the company's decision to set aside$63 million to address repurchase settlements with Fannie Mae and Freddie Mac.
Noninterest expense rose 25% from the second quarter and 1% from a year earlier, to $1.7 billion, because of the mortgage-related legal costs. The company also said that it incurred $96 million in expenses after increasing its allowance for servicing advances.
SunTrust's compensation costs fell 7% from the second quarter and 13% from a year earlier, to $682 million. The company said it had reduced its staff by 6% over the past 12 months.
The company also noted that it had a $113 million after-tax benefit that helped cushion the blow from the mortgage issues.
